Thursday, 16 Oct 2014

Written Answers Nos. 70-79

Universal Social Charge Payments

Ceisteanna (70)

Terence Flanagan

Ceist:

70. Deputy Terence Flanagan asked the Minister for Finance his views on correspondence (details supplied) regarding the universal social charge; and if he will make a statement on the matter. [39590/14]

Freagraí scríofa

Minister for Finance

The Universal Social Charge (USC) was introduced in Budget 2011 to replace the Income Levy and the Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit.  It is applied at a low rate on a wide base, and is a more sustainable charge than those it replaced.  It was designed and incorporated in to the Irish taxation system as part of its permanent structure and the revenues collected play a vital part in meeting the many expenditure demands placed on the Exchequer.

While individuals who are subject to the USC charge do not accumulate entitlements or specific benefits, they do benefit generally from the services provided by the State, which the yield from the USC and other taxes permit.

I would point out however, that as a result of a review of the USC conducted by my Department in 2011, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge.  In Budget 2015 I have extended this exemption threshold to €12,012 to apply from 1 January onwards. This will exempt a further 80,000 individuals from the charge.

VAT Rate Application

Ceisteanna (71)

Patrick O'Donovan

Ceist:

71. Deputy Patrick O'Donovan asked the Minister for Finance the VAT charges on solid fuels per tonne from 2000 to date in 2014; and if he will make a statement on the matter. [39593/14]

Freagraí scríofa

Minister for Finance

I am informed by the Revenue Commissioners that the approximate annual yield from VAT on solid fuels from 2000 to 2013 is as set out in the table.  Please note the 2014 figures are not yet available.

Year	Estimated VAT Yield	Applicable VAT Rate
2000	€13m	12.5%
2001	€28m	12.5%
2002	€23m	12.5%
2003	€23m	13.5%
2004	€39m	13.5%
2005	€24m	13.5%
2006	€38m	13.5%
2007	€25m	13.5%
2008	€40m	13.5%
2009	€49m	13.5%
2010	€42m	13.5%
2011	€37m	13.5%
2012	€47m	13.5%
2013	€52m	13.5%

Carbon Tax Collection

Ceisteanna (72)

Patrick O'Donovan

Ceist:

72. Deputy Patrick O'Donovan asked the Minister for Finance the total amount of carbon tax per tonne on solid fuels and the way Ireland compares with other European countries; and if he will make a statement on the matter. [39605/14]

Freagraí scríofa

Minister for Finance

The carbon tax rates that apply per tonne of solid fuel, based upon a charge of €20 per tonne of CO2 emitted on combustion of the fuel, are set out in the following table.  

Description of Solid Fuel	Rate of Tax
Coal Peat: Peat briquettes Milled peat Other peat	€52.67 per tonne  - €36.67 per tonne €17.99 per tonne €27.25 per tonne

 

Based on the information provided by Member States to the EU Commission under the Energy Tax Directive, the average tax applied across the EU per tonne of coal for business and non-business use is €31.01 and €44.37, respectively. These rates range from the minimum rate of €8.36 per tonne of coal in a number of member states, to €375.94 per tonne of coal in Sweden, €327.72 per tonne of coal in Denmark, €144.91 per tonne of coal in Finland and €47.38 per tonne of coal in Austria. The UK does not apply a tax equivalent to the solid fuel carbon tax. As the Energy Tax Directive does not apply to peat, information on the taxation of this fuel in other member states is not published by the EU and is not readily available.

Question No. 73 answered with Question No. 67.

VAT Rate Application

Ceisteanna (74)

Éamon Ó Cuív

Ceist:

74. Deputy Éamon Ó Cuív asked the Minister for Finance his plans to make personal protective equipment VAT exempt for all emergency services such as Blood Bike West; and if he will make a statement on the matter. [39704/14]

Freagraí scríofa

Minister for Finance

The VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. EU VAT exemptions are set out in Articles 132 and 135 of the EU VAT Directive and do not cater for the supply of the personal protective equipment, as mentioned by the Deputy. 

Furthermore, it is not possible under the VAT Directive to apply a zero or reduced VAT rate to personal protective equipment in general.  However, the supply of personal protective equipment clothing for children up to 10 years of age is liable to VAT at the zero rate.  The supply of PPE clothing for children older than 10 years and adults is liable to VAT at the standard rate of 23%.  Article 110 of VAT Directive provides that Ireland can maintain the zero rating on those goods and services which were zero-rated on and from 1 January 1991. As children's clothing was zero rated at this time the zero rate can continue to apply to personal protective equipment clothing for children, but it is not possible to extend the zero rate to all personal protective equipment.

Mortgage Schemes

Ceisteanna (75)

Anne Ferris

Ceist:

75. Deputy Anne Ferris asked the Minister for Finance if he will provide an update on progress by his Department on a proposed mortgage insurance scheme for first-time buyers of new homes whereby a portion of the mortgage would be guaranteed by the State, in view of the recent proposals by the Central Bank of Ireland for more restrictive loan-to-value and loan-to-income limits for mortgage applicants; and if he will make a statement on the matter. [39720/14]

Freagraí scríofa

Minister for Finance

Last May, the Government launched 'Construction 2020: A strategy for a renewed construction sector'. The strategy includes the Government's desire for a return to sustainable levels of mortgage lending as part of a healthy market. This involves the consideration of measures to stimulate the development of housing in a sustainable manner. In order for developers to be supported, they need confidence that customers will be capable of accessing finance to purchase new houses. This means mortgage products being available to potential purchasers with an ability to support repayments. As part of this process, an examination of some proposals for additional models of mortgage finance, including the concept of a mortgage insurance scheme, has been undertaken.

As the Deputy will be aware, Budget 2015 contains a number of measures to support a functioning housing market. In particular, in order to support first time buyers to save towards a deposit for their first home, DIRT will be refunded in respect of savings up to a maximum of 20% of the purchase price. This measure will run until the end of 2017.

In addition, and having regard to its role as prudential regulator of financial institutions, the Central Bank of Ireland published a consultation paper on 7 October 2014 which includes proposals for new macro-prudential measures to enhance the resilience of the banking sector and households to housing market developments. The proposals include a number of measures, one of which is to require lenders to restrict new lending for primary dwelling purchase above 80 per cent LTV to no more than 15 per cent of the euro value of all housing loans for principal dwelling home purposes entered into in a six monthly period. The Central Bank has now commenced a consultation process on the proposed measures, and submissions and comments on these can be made to [e-mail].

It is important to note that the Central Bank of Ireland is independent in the exercise of its functions and that it has the power to implement such macro prudential proposals by way of a regulation issued under Section 48 of the Central Bank (Supervision and Enforcement) Act 2013.

Licensed Moneylenders

Ceisteanna (76, 77, 82, 83)

Terence Flanagan

Ceist:

76. Deputy Terence Flanagan asked the Minister for Finance the maximum interest rate that moneylenders can charge; and if he will make a statement on the matter. [39737/14]

Terence Flanagan

Ceist:

77. Deputy Terence Flanagan asked the Minister for Finance his plans to have his Department carry out an assessment of the impact on consumers of an industry wide interest rate cap; and if he will make a statement on the matter. [39738/14]

Terence Flanagan

Ceist:

82. Deputy Terence Flanagan asked the Minister for Finance his views on setting a maximum interest rate of 50% APR charged by moneylenders; and if he will make a statement on the matter. [39746/14]

Terence Flanagan

Ceist:

83. Deputy Terence Flanagan asked the Minister for Finance if his attention has been drawn to the fact that 13 EU countries have a legal cap regarding the maximum rate of interest that moneylenders can charge; if there is a European directive in this regard; and if he will make a statement on the matter. [39747/14]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 76, 77, 82 and 83 together.

Moneylenders have to apply to the Central Bank on an annual basis to have their licences granted or renewed. Part VIII of the Consumer Credit Act 1995 (as amended) sets out the Central Bank's powers, duties and responsibilities in relation to the granting or refusal of a moneylender's licence and in relation to their regulation when such a licence is granted.

The Central Bank has advised me that there is a rigorous process involved in the granting or renewal of a licence. The Central Bank can refuse to grant a moneylender's licence on a number of grounds. One of these grounds is:

- where, in the Central Banks opinion, the cost of credit to be charged is excessive, or where any of the terms and conditions attaching thereto are unfair.

Each application for a moneylending licence is individually assessed.

The Central Bank publishes a register of licensed moneylenders on its website.  This register includes the maximum Annual Percentage Rate (APR) that each moneylender is authorised to charge. The maximum APR charged by a licensed moneylender has not increased since the Central Bank assumed responsibility for the licensing and regulation of moneylenders in 2003.  APRs on moneylending agreements range from 23% to a maximum of 188.45%, excluding collection charges. The highest APR including collection charge is 287.72%.  APRs vary significantly, depending on the duration of the loan.

Each licensed moneylender is also required to display a copy of its licence in its business premises.  The licence contains a schedule of each product which the moneylender is entitled to offer, together with details of the related cost per €100 borrowed, the collection charge (if applicable) and the APR. 

I appreciate that vulnerable consumers, sometimes as a last resort, are using licensed monelylenders and therefore, consumer protection is crucial. The Central Bank's authorisation regime and its Code of Conduct provide a significant degree of protection to these consumers. My Department is also significantly engaged with other consumer protection measures in the financial services area which include the proposed legislation to protect consumers on the sale of loan books, the transposition of both the Mortgage Credit Directive and the Payment Accounts Directive into Irish law as well as the implementation of the Credit Reporting Act 2013 and ongoing work in relation to mortgage arrears.

I note from the topical issues debate last week on the matter of moneylenders that the Deputy referred to the situation in other European countries where usury rules prevail. EU consumer credit legislation does not specify the rate of interest which a moneylender may charge although moneylenders are of course subject to the European Communities (Consumer Credit Agreements) Regulations 2010 (Statutory Instrument 281 of 2010) which transposed the Consumer Credit Directive. As was indicated last week, the setting of a cap on interest rates (sometimes used as a target, and not a cap) may not achieve the objective of lowering the total cost of credit and could result in excluding low income households from access to credit.

Licensed Moneylenders

Ceisteanna (78, 79)

Terence Flanagan

Ceist:

78. Deputy Terence Flanagan asked the Minister for Finance the sanctions applied by the Central Bank of Ireland on moneylenders; and if he will make a statement on the matter. [39740/14]

Terence Flanagan

Ceist:

79. Deputy Terence Flanagan asked the Minister for Finance if he will provide examples of the Central Bank of Ireland refusing to grant moneylender licences at annual renewal; and if he will make a statement on the matter. [39741/14]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 78 and 79 together.

Compliance with supervisory and legislative requirements is monitored by the Central Bank on an ongoing basis through a robust annual licensing process, advertising and market intelligence monitoring and themed and institution-specific inspections. Issues identified are addressed with the relevant firms.

The Central Bank has drawn my attention to two cases in which it reached settlement agreements with moneylenders. These are available in http://www.centralbank.ie/publications/Pages/settlement-agreements.aspx. In one case dated 10 July 2007, the moneylender was reprimanded and it ceased collecting repayments in respect of some credit agreements bought from an unauthorised credit provider. In the other case dated 18 September 2013, the Central Bank reprimanded the moneylender and required it to pay a monetary penalty of €8,000.

Firms considering applying for a moneylending licence will usually discuss their proposed application with the Central Bank with a view to identifying all legislative and supervisory requirements relating to such a licence. As a result of this interaction, a refusal of an application will not generally arise as perceived difficulties will usually result in the non-submission/withdrawal or modification of an application. The renewal process is similar and issues may be resolved without a formal refusal. The Bank has drawn my attention to a judgement of the Irish Financial Services Appeals Tribunal ( IFSAT ) in May 2014 which upheld a decision of the Central Bank of Ireland (the Central Bank ) to revoke the moneylender's licence. This is available at

http://www.centralbank.ie/press-area/press-releases/Pages/TribunalupholdsdecisionbyCentralBanktorevokemoneylenderslicence.aspx.